In the most important Section 128A ruling from any High Court since the waiver scheme took effect on 01.11.2024, the Madras High Court has resolved the central disputes that have generated the largest volume of Section 128A litigation across the country. In a common order covering 28 writ petitions by Justice Senthilkumar Ramamoorthy, the court has held that self-assessed tax arising from GSTR-3B and GSTR-1 mismatches and delayed return filing is squarely covered by Section 128A, that CBIC Circular No. 238/32/2024-GST is bad law to the extent it excludes such cases, and that void orders declaring previously issued SPL-05 approvals void are impermissible unless they fall within the narrow confines of Rule 164(16) or Rule 164(17).
The litigation arose from a uniform pattern: tax authorities had rejected waiver applications filed in Form GST SPL-02 — or issued orders declaring previously accepted SPL-05 approvals void — on the basis that the underlying demand arose from non-payment of self-assessed tax (reflected in the mismatch between GSTR-3B and GSTR-1 returns or late filing with late payment). The authority relied on Serial No. 4 of Circular No. 238, which states that interest on delayed filing of returns or delayed reporting of supplies is interest on self-assessed liability directly recoverable under Section 75(12) and therefore falls outside Section 128A. A parallel stream of cases involved SPL-05 approvals that were initially granted but subsequently declared void by orders passed under Section 161 (rectification), on the same rationale.
The court's reasoning on the central issue is textual and structural. Section 128A opens with a non obstante clause in the widest possible terms: "notwithstanding anything to the contrary contained in this Act." Section 75(12), which enables direct recovery of self-assessed tax under Section 79 without a Section 73 determination, also opens with a non obstante clause — but a narrower one that overrides only Sections 73, 74 and 74A. Where two provisions both carry non obstante clauses and operate in related fields, the broader one prevails. Section 128A's clause is broader. Moreover, if Parliament intended to exclude self-assessed tax from Section 128A, it had a readily available model: Section 80 of the CGST Act expressly excludes self-assessed liability using the phrase "other than the amount due as per the liability self-assessed in any return." No such phrase appears in Section 128A. The GST Council's own deliberations — recorded in the 53rd GST Council meeting — show that the only exclusion discussed was for erroneous refund, and this is the only exclusion that found statutory expression in Section 128A(2). The silence on self-assessed tax was not an oversight; it was a deliberate legislative choice.
On the question of whether Revenue's invocation of Section 75(12) prevents a Section 128A application: the court confirmed that the initiation of proceedings under Section 73 is a sine qua non for filing a waiver application. Where Revenue chooses to go directly to Section 79 under Section 75(12) without initiating Section 73 proceedings, Section 128A is unavailable. But once Revenue has initiated Section 73 proceedings — as it had done in all 20 cases in the first category — the taxable person is entitled to file a waiver application regardless of whether the underlying demand relates to self-assessed tax.
On void orders, the ruling is equally clear. Rule 164 identifies exactly two situations where a previously issued SPL-05 approval becomes void by operation of law: sub-rule (16), where the taxpayer fails to pay additional tax directed by an appellate order as per the second proviso to Section 128A(1); and sub-rule (17), where interest or penalty on erroneous refund or out-of-period demand mentioned in the SPL-05 is not paid within three months. These sub-rules are self-executing — the waiver becomes void automatically when the conditions are triggered, without any executive order being needed. Outside these two sub-rules, no authority — whether under Section 161 or otherwise — can declare a valid SPL-05 approval void. The orders in the four cases in this category were accordingly set aside and the SPL-05 approvals restored.
On Rule 164's time limits, the court rejected the direction taken by Karnataka HC in Sri Laxmi Borewell Agencies and Akshaya Borewells, which had held that the three-month filing window in sub-rule (6) is directory because the sub-rule uses the word "may." The Madras HC read the sub-rule as a whole: "may" refers to the taxpayer's option whether to file at all; if the taxpayer elects to file, the three-month deadline is mandatory. The drastic consequence of deemed approval under sub-rule (14) if the proper officer fails to act in time underscores that the entire Rule 164 architecture — including the filing deadline — is time-bound and mandatory. Eight petitions involving belatedly filed applications or late payment were accordingly dismissed.
-2026-juristway.com-2160-HC(Madras)-GST | High Court of Madras | 28.07.2026